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Seven Social Transformations Unleashed by Mobile Devices

A ubiquitous technology redefines the way we engage with people, information, and companies.
November 30, 2010

EDITOR’S NOTE: This Big Picture essay wraps up our month-long special report on the Mobile Enterprise. Starting tomorrow, the entire report will be available only as a premium publication (in PDF format) for those who pay to receive it.

Today’s mobile device is the new personal computer. The average smart phone is as powerful as a high-end Mac or PC of less than a decade ago. And as billions of people worldwide rely on these ultra-compact machines for more and more tasks, the mobile device might qualify as humankind’s primary tool.

We are only just beginning to fathom what this reality implies for business, culture, and society. Our phones can now track our movements though the physical world. They can record our social interactions, store our personal histories, keep tabs on our likes and dislikes, and track our Internet content consumption, app usage, and purchasing behavior. As we outsource ever more of our decisions and memory functions to smart devices, our tools are gaining a powerful advantage over us. They live in our pockets; they know who we are. They’re learning more and more about us all the time. That’s why smart phones and tablets are uniquely positioned to predict what businesses should do to serve us best. Our devices are both comforting and a little frightening at the same time.

With over five billion individuals currently armed with mobile phones, we’re talking about unprecedented levels of access and insight into the psyches of over two-thirds of the world’s population. From any perspective—commercial or Orwellian—this is no small matter.

In the late 1990s, dot-commers were fascinated by a chart showing how long it took for each of the major media—daily newspapers, radio, and television—to reach 50 percent of U.S. households. Each of those technologies required decades to cross that threshold, but the Web took only a few years. Yet Web penetration pales by comparison with mobile today, in several important respects: Mobile usage is about individuals—both adults and kids—not just households. Mobile devices are bringing sweeping change to developing and poor nations, not just the industrial world. In other words, mobility has democratized computing and global Net access.

Part of this story goes beyond expansion of mobile subscribers. The transition to new devices is taking place with lightning speed, too. Clamshell and candy-bar phones designed primarily for voice communications (known as “feature phones”) are giving way to smart phones, and growth in access to high-speed 3G (and now 4G) networks continues to accelerate around the world.

The number of global 3G mobile Internet subscribers should approach a billion within a year or so, with the highest penetration rates in Japan (98 percent), Korea (80 percent), the U.S. (48 percent), and the U.K. (38 percent). And where 3G penetration has been low, year-over-year growth is blazingly fast—81 percent growth in Russia, 148 percent in Brazil, and 941 percent in China.

From a business perspective, no one can ignore the implications of mobility. Although the changes may be too numerous to track, it is possible to group them into seven fundamental transformations.

Instant Discovery

From time immemorial, humans as a species have relied for their survival on an ability to discover relevant information, whether that was knowing where the wildebeest drank water at night to ensure a meal the next day or finding the nearest ER during a medical emergency to save a life. Google’s “PageRank” algorithm, which helps find answers to 70 percent of the world’s online search queries, has changed how we as a species find the information we want or need. Now Google Instant provides search results before we’ve even finished typing the query. Sure, this matters on a PC, but it matters even more on a mobile. Mobile search has made discovery ubiquitous in the physical world of daily life.

Geo-tagging and location-aware services, in combination with search, have made discovery a two-way street. Apps such as Foursquare give users a means to “check in” at physical locations, giving friends, businesses, and brands a way to discover them. Startups such as Locately go even further, tracking car routes and foot paths on shopping trips.

Two-way discovery has broad implications for business. Shoppers can use their phone’s camera and apps such as Red Laser or ShopSavvy to scan the bar code of any product, enabling instant price comparison among dozens of retailers. If they’ve signed up for Amazon Prime (which provides unlimited two-day shipping for a flat annual fee), they can lock in two-day delivery from Amazon before they’ve left the store. Sure, Amazon, like other online retailers, is a free rider in this scenario, at the retailer’s expense. But consumers win on price, access, and convenience in ways that were inconceivable before mobile devices. This alone will force changes in the way all retailers do business.

Compressed Expression

Forging connections with others is at the core of what makes us human. When e-mail largely replaced letter writing, our connections became more immediate, informal, and abbreviated. Texting has made it even more so. One recent study showed that a third of U.S. teenagers send more than 100 text messages per day. In parts of the world where feature phones predominate, texting is the de facto e-mail and a low-cost substitute for voice communications. It can even be used to shop.

Social networking may represent an even more significant change, compacting our missives into blurbs that are sometimes directed to everyone and no one at the same time. Consider that the world’s major social networks (Facebook and MySpace based in the United States; Orkut in Brazil; CyWorld in Korea; Bebo in the UK, Mixi in Japan; Tencent in China; and others) collectively have nearly two billion users—nearly a third of the world’s population.

Mobile makes social networking even more compelling, as it enables us to share what we see and do in our daily lives in real time. Twitter’s meteoric rise has been inextricably linked to users’ ability to “tweet” from mobile devices, and it imposes an especially draconian compression of social expression, with posts limited to 140 characters. Meanwhile, the world’s largest social platform, Facebook, has introduced a “one-click” form of expression: the thumbs-up icon, otherwise known as the “Like” button. Yes, it’s compelling on the Web, but it’s more powerful still on the small screens of mobile devices. What better way for a brand to find a willing consumer than by linking back to someone who “likes” you? Companies are already creating new products and marketing them in a way that maximizes the value of their “likes” in social media.

Outsourced Memory

The ability to record memory has played a crucial role in human existence since the dawn of our species. Long before the invention of the written word, humans used cave paintings and pictographs to store information that would benefit future generations. Writing—first on stone, then on papyrus, and, after Gutenberg, in print—became the ultimate storage medium. Now most of us can no longer remember our friends’ phone numbers, let alone any sequence more complex than 911.

Our mobiles remember more than just numbers for us. We’re outsourcing memory to our devices. Google Maps will “bookmark” places we’ve visited or intend to visit, remembering not only locations but also their context—like work, shopping, or friends’ houses. Combined with cloud-based storage on remote servers, mobility places in our pockets an infinite reach and infinite capacity for remembering. Some large corporations are stepping into radical new territory by relying on cloud-based servers to store all of their mobile applications and databases.

The outsourcing of memory also extends to the images we see, as we use camera phones to capture special moments and even to record our daily lives. According to a recent Pew Research Center report, 76 percent of Americans now take pictures with camera phones, up from 67 percent a year ago. About a third of Americans record video from their mobiles, up from less than 20 percent a year ago. Users are uploading video to YouTube at an average rate of 35 hours of footage a minute.

One pundit has called our era “The End of Forgetting.” We’re perhaps more accurately living through an era when we’re exploring radically new ways of remembering. While we offload details (meaningful and mundane) to our mobile devices, we may also be freeing up our brains for new kinds of information, such as complex social linkages and social sharing. If so, psychologists and sociologists as well as leaders and managers will be dealing with these ramifications for years to come.

Automated Decisions

As empowered consumers, we like to think we make all the choices. As business people, we in theory are paid to make intelligent decisions. But the reality is that mobile computing provides countless ways for smart devices to decide for us. True, some automated decision making is a byproduct of our own initiatives. Yapta, an iPhone app that tracks airline flight availability and pricing, gives frequent travelers a means to buy airline seats only when their decision criteria are met.

But smart phones can also make their own decisions, without our having to think about them at all. Start with the basics: Give a phone appropriate authorizations and it will “decide” what service to use when connecting with local WiFi networks. Use Foursquare or Venmo to check in at various real-world venues and your mobile will “decide” what local retail offers you get. Because privacy considerations are increasingly mandating opt-in services, the future is likely to bring us a hybrid of conscious and unconscious decision automation.

An instructive example is Pandora’s iPhone app. It pleasingly streams the music it decides a given user will like based on information the person gives when opting into the service. Users continue “educating” it about their preferences—by clicking on a thumbs-up or thumbs-down button as Pandora serves up selections across dozens of genres from its seemingly infinite play lists. Yes, the user picked the genre; yes, the user expressed the preferences. But now, the question becomes: can Pandora’s decision engine remain pure of any commercial considerations?

For marketers seeking the holy grail of brand “lock in”—especially brand loyalty sustained over time—a smart mobile phone could become the key, the gatekeeper, and even the purchasing agent for the consumer.

Peer Power

Decision making normally takes place in a social context. When humans connect, they influence and persuade. That’s why marketers often say that word-of-mouth marketing is the most powerful medium that money can’t buy. Of course, the rise of online social networks is turbocharging all of that. Some marketers would argue that money can buy positive word-of-mouth endorsements for their brands. That may explain why Facebook hosts more display ads than any other site on the Web. (According to the marketing research company comScore, Facebook’s share is now one of every four display ads online.)

Mobile social networking means that peer influence is more important than ever. Apps like Fashism provide style-conscious young women with something far more effective than a bunch of anonymous third-party clicks on a “Like” button. Let’s say someone is in a dressing room with a new outfit on, wondering whether to buy it. So she snaps a photo with her iPhone and uploads it using Fashism (or a similar app from GoTryItOn or ModCloth), and community members will tell her how she looks. That changes everything for marketers trying to manage perceptions of their brands.

In analogous ways, mobiles can create social movements based on peer influence. Facebook teamed up with Starbucks to raise money for Conservation International. Every time a mobile user checks in with the Facebook Places app from a Starbucks café, the coffee retailer will donate a dollar to the charity, up to a maximum of $75,000. Another service, GiveGiFi, uses Venmo and Foursquare to let people leave gifts for purchases at places such as restaurants, hotels, bars, stores. Mobile payment systems, too, are going social, enabling consumers to broadcast when and where they bought, say, a movie ticket—a new way of influencing friends to join them. With all these social apps at their disposal, businesses are bringing the tools of direct-response marketing to physical places.

Personalized Branding

While we humans think we mostly talk to each other, marketers would like to think that brands can talk to us, too. In fact, that’s the essence of modern marketing—giving brands a “personality.” This is rapidly turning into the challenge of how to give brands a social (and socially appropriate) “voice.” Well before Apple had sold, by current count,120 million iPod, iPhone, and iTouch devices, marketing and agency types were grappling with the question of how to “enter the conversation” taking place online about their brands and offerings.

Now mobility has introduced a new, more personal dimension. Billions of dollars in advertising are rapidly shifting to mobile media. Once there, brands must face the thorny question of how to enter that conversation—already a complex array of interactions and communications among millions of consumers—as it unfolds. One possibility is to use mobiles to make things speak. A Swedish dairy, Skånemejeriet, thinks it’s important for its natural products to be able to tell their own stories. It has fielded an iPhone app that enables grocery consumers to enter a code from a milk carton’s date stamp and learn about the local farmer who produced the milk. Natural-food maker HarvestMark has partnered with Kroger, the U.S. grocery retailer, to field a similar app than lets consumers connect with any brand and learn its brand story.

Wireless Economic Development

In the last several years, poor countries and developing nations have acquired mobile handsets at a rate that’s four times that of the developed world. These are not smart phones (yet), so the role they’ve played is “limited” to texting or SMS.

When it comes, however, to aggregating large quantities of information relevant to human populations - whether markets and pricing, crops and weather, health and epidemics, pollution and the environment - collective data from millions of users don’t require 3G networks or smart phones.Thus Nokia continues to ship more mobile handsets than any other consumer electronics maker. Its feature phones remain highly affordable. In the hands of enterprising individuals in the developing world, such devices connect not only people to people but also people to the world’s information resources.

The opportunities are abundant, starting with mobile payment systems and banking services for the “unbanked” in parts of the world where many more people have mobiles than bank accounts. To build small businesses, entrepreneurs need cashless ways to pay for goods and services. That’s why Mony (a “mobile wallet” service from YellowPepper in Ecuador) and M-Pesa (a similar service that began in Kenya), are starting to have a big impact on economic development. Phones that accept and store cash are also being used as crowdsourcing devices that enable some of the planet’s poorest people to earn money for performing microtasks.

In short, mobility is transforming humanity. Without question, it’s a double-edged sword. On one hand, mobile technology is making us more connected as a species; it is putting nearly unfathomable resources of data, information, and content at our finger-tips; it’s making such resources ubiquitous and easily accessible; and it’s rendering such content ever more compelling and immersive to find and experience. On the other hand, our mobile devices are eavesdropping on us and trespassing on our privacy as never before, changing what and how we remember our lives, short-circuiting our decision-making authority, and compressing our communications into smaller and smaller bites. The future of mobility is, in some ways, profoundly sobering, even as it augurs infinite possibilities for business. Never has computing been so personal, and never has information technology been so pervasive. So, pay attention to what’s in your pocket. Watch it as it watches you. And stay tuned. Our mobiles are collectively and dramatically shaping the future of business.

Jeffrey F. Rayport is an Operating Partner at Castanea Partners and Chairman at Marketspace. LLC. Carine Carmy at Marketspace contributed research and reporting to this article.

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